Wednesday, November 29, 2006

So… I sit here in the UN (I kid you not the United Nations) waiting for SL to come back up so we can use it in conjunction with a day long forum on information technology in regards to humanity and how it can help change society and our future. Ideas layed out in the UN Millennium Development Goals.

So… til then, if anyone else waiting for SL would like to view the live proceedings and leave comments in regards to what goes on, hop on over to http://och-forum.blogspot.com/. We really would love to make up for the lost input we would have had from the teen forums and have you guys weigh in.

Saturday, November 18, 2006

When you visit Second Life these days, you will meet a lot of grumpy long time users. The huge success, which SL enjoys lately, is a reason to celebrate of course (for early adopters, who "knew it all along"). It has some disadvantages, though.

With more than 12,000 new accounts every day and the number of concurrent users doubling in a very short time, Second Life's infrastructure is under a terrible stress; not only the technical infrastructure. If you log in to SL at peak times, you will experience slow load times for textures and an unusual amount of "lag" (long response times) - even in former low-lag areas. The system is literally groaning under the load.

What's more: the support structures for newbies can't cope with the flood any more. Volunteer helpers burn out - they have always been too few, anyway. And this support is badly needed. Second Life not an easy system to learn. The consequence is, that many newbies leave SL after a very short trial period - probably for good. Tateru Nino has written an excellent arcticle on this topic.

But this is not simply "bad management" from Linden Lab, as some disgruntled residents would like to see it, but part of a grand strategy - and not an uncommon one for markets like this.

The winner takes it all!The developments of the last months were heavily critized in many weblogs and forums, with the general qualification of Philip and Linden Labs management, which is responsible for the hyper-growth strategy, being put in doubt. The explanation "They are all idots" falls short, of course; like in most similar cases. What we are witnessing actually, is a risky, but quite common gamble according to the rules of Web 2.0 Economy / Social Software Platforms.

These rules are simple and can be summed up with "The Winner takes it all!"

Today Linden Lab is more or less without competition in its market segment. (I know, many will argue with that, but - honestly - I don't see any real contender in the market for open, user-created 3D spaces.)

With all of the hoopla around Second Life this will change. Growth rates of 20% per month will attract other companies. And - to say it frankly - it is not that hard, to build a better platform for this purpose. Second Life at its core is 5 years old these days. There have been improvements in technology which Linden Lab seems to be unable to integrate and the user interface is not a masterpiece from a usability point of view. The learning curve is unnecessarily steep.

On the other hand ... Second Life more than 95% "user generated content"! And the attractiveness of such a platform is based to a large degree on exactly this content (not on the quality of the platform itself). Look at YouTube, MySpace or ... eBay. Every new contender in such a market will start from a very uncomfortable position. "Market entry barrier" is the word.

A huge competitor could - maybe - compensate this with a marketing campaign that simply bullies Linden Lab out of the publics visibility. Never forget that Linden Lab is just a small company with less than 100 employees and some 20 Million VC funding - most if which is probably spent already. But even Marketing can not overcome the advantages of a large userbase above some critical size. Nobody could easily challenge YouTube or eBay these days - no matter how much money they spend for marketing.

My personal estimate is, that, if Second Life can grow just one more year without a serious competitor reaching the market, they will have secured such a position. A competitor would have to spend Billions, not Millions, to have a chance for success ...

And exactly this is Linden Labs gamble:

Grow as fast as you can to reach this critical mass, and don't listen to the funny sounds from the engine room.

We are in for a rough rideWe - as residents and developers - can only watch this game. And it certainly is interesting to watch. We are in for a rough ride.

But it is is a small risk for us anyway - in the long run: Should Linden Lab win, the growing pains will be overcome in one or two years. Should they loose the game, this will only happen, because some other company has brought something considerable "better" to the market. Switching over might be inconvenient for a while.

But in the long run we all would profit from this "better" system. And if Linden Lab wins against a strong competitor, this will only help to improve Second Life through pure market pressure.

Wednesday, November 15, 2006

... but this might be a turning point for the Second Life content business, as we know it now.

Raph Koster made an excellent post in his blog (required reading), which Frans quoted in the last post here on the SLOG. He makes an excellent analysis of the issues around copyright in the digital realm from years of experience in the MMO industry. And, I am afraid, everything he says is true: it is more or less impossible, to effectively protect "content" in Second Life - like it is impossible to protect content in First Life - especially in digital form. There is not much Linden Lab can do about this. Like there is not much the music industry can do about it on the internet of today.

This already has been true for quite a while. CopyBot just made it apparent. It will change the content industry in Second Life dramatically over the coming year. It won't be impossible to make money with content like fashion, skins, prefabs etc. but it will be harder, maybe much harder - like it is harder now for the music industry to make a profit than it was some 10 years ago.

I don't think the publishers (or platform companies like Linden Lab) are to blame. It is us, the consumers, who drive this development by doing what serves us best - short term! Still I did not like one part of Raphs original post where he describes this in words that seem a bit harsh to me, because, what he decribes is not true in Second Life (as to my personal experience):

And all of a sudden, the same folks who likely argue cyberliberties and donate to the EFF and have gigs of video stored on RAIDs they keep in their garage suddenly feel the sting of perfect digital copying. CopyBot is a mirror, and what we see reflected in it is the unsavory fact that we all want DRM, if it favors us.

I tend to seriously doubt that it is really the same "same folks who likely argue cyberliberties and donate to the EFF and have gigs of video stored on RAIDs" who are protesting in Second Life now. This has got to do with the very special demographics of Second Life and the fact that many, many of the - so far - successful entrepreneurs in Second Life are not rooted in the game player/ script kiddie/ hacker culture. If you look at the fashion industry for example, you will find very many people (a lot of women) far into their 30s, 40s or even 50s who probably won't have 60 megs of stolen MP3s on their iPod.

I don't want to sound too pharisean, but I - besides being male - am maybe a better role model for these "inworld business people" than the stereotypical Open Source advocate you are describing. I am 46 just now and most of the tracks on my iPod stem from CDs I actually own. The rest was downloaded from iTunes. And you won't find a single copied DVD in my household. ;)

I am sure, though, that from a technical viewpoint Raph's assessment is right and in the long run not much can be done to prevent content theft from websites or Second Life. So society will have to adapt to this fact - as well as they will have to adapt to the fact, that soon most of this content will be "manufactured" in south east asia or to the fact that major publishing houses (music, print, movies ...) will die in the coming years. Society allways adapts.

What I find a bit hypocritical, though, is Linden Lab's attitude towards the issue. They are seriously tooting SL as a platform to make real money on, while being rather laissez faire with the whole issue of Copyright (in action, not in words). This seems either naive or maybe a bit dishonest to me.

Raph Koster has made a very well witten post on his blog about our current copybot issues.

"Raph: All this is to some degree beside the point; the issue here is not which side is right, but which side owns the soul of the stream. You see, in something like Second Life, it’s not the megacorps who are having their stuff copied, it’s us. It’s not the big companies that are trying to profit, it’s the little guys. And all of a sudden, the same folks who likely argue cyberliberties and donate to the EFF and have gigs of video stored on RAIDs they keep in their garage suddenly feel the sting of perfect digital copying. CopyBot is a mirror, and what we see reflected in it is the unsavory fact that we all want DRM, if it favors us."

Eric Rice pointed this out as well. It is easy to steal from Microsoft or miljonair artists, but when we our selves are trying to earn a living selling digital goods, the matter suddenly looks a lot different when someone copies your wares.

Partially this a repeat of steps of the early web, when people started to copy whole website designs, html, images, javascripts, etc. And this made it impossible in some form to sell simple website designs, but it didn't stop the growth of the net. New technology and designs where still created, and the webdesigner became proffesional, working for clients making tailored sites.This shift would have happend anyway and is already happening, just look at the work The Sheep or MuO is doing.

But even the wholesale of webdesign didn't stop, with newer tech it became possible again to create templates and to just sell them multple times, just look at the flash template sites.

"Raph: The issue is that at its core, the underlying philosophy on which virtual worlds are built is one that encourages copying. The further we move towards the inevitable world of streaming rather than cached worlds, the more of this we will see — just as stylesheets, images and whole websites are rather indiscriminately reused, remixed, and repurposed all over the web, quite without the original author’s permission. Just as tools that we find incredibly useful are built out of scraping data off of someone else’s screen. In fact, the whole Web 2.0 philosophy, which is many many ways MUDs anticipated by a few decades, is based on spitting out data streams for this express purpose, so that new uses can be barnacled on them."

Offcourse you can move away from SL and go to There or ImVu where content creation is much more regulated, but that comes with the price of a lot less freedom and a regulation that prevents growth. And what you make there can still be stolen as well.Just like people are still buying legally music and software so will they do in SL. Our tasks for now will be educating the customer on why there are copyrights and what is the limit of fair use.

Friday, November 10, 2006

Lately complaints about big/RL corp intrusion into SL is heating up, specifically after the announced price raise of island estates by LL. As you can see in the comments on the LL Blog here and this post on SLI. And my responses, here and here.

People feel that the big corps only should be paying higher tier rates (what ever those prices would be). One of the reasons is that some assume the price increase in Island tier is (only) the result of the sudden increase of members. Forgetting that every business in SL profits from the hundreds of thousands new eye balls looking in to SL. I know my sales have only been increasing the last months. Thank you Reuters and Yahoo.

Or is that the Big Corporations have the money so let's just give the bill to them, even though it has been established that they aren't even creating the highest traffic.

A other reason is that Big Corps are often besides selling a SL product advertising for their RL products as well. For a immersionist that is of course a deadly sin. "Don't bring my sucky RL in to SL, yo!"

What puzzles me about their attitude is that they are discriminatory and secondly that they assume it would be a easy distinction for LL to make. Of course the corps in the spotlights right now are easy to make out, Toyota is a big Corp and should pay more, Dominus by Francis Chung(not me) is Resident grown and will be subsidized.

But lets blur the line with a big fat marker. One day a sim or multiple sims open named Donkervoort, and there you find a assortment of spiffy sport cars for sale. Now when you right-click you see that the sim and all the contents is created by Frans Charming(yes me). And you might say: "Hey cool, Frans has gone in car design and even has a original brand name!".

Later you find out that actually Donkervoort is a RL sports car manufacturer in The Netherlands, and you cry foul, "Boo, Frans should be paying Commercial Rates". But Frans responds: "What for? Donkervoort isn't promoting this, I bought a License to reproduce and sell their cars and brand in a virtual environment!".And now it gets difficult, is this a homegrown Resident who just invested some money into designs and brand name or is this a 'Big Corp' even though they are only involved in the way of a License?

And what if I tell you when I entered SL, it was on the prospect of making some money. I saw Tringo's success and thought, lets explore this. Am I now a business off to make money on SL or a homegrown Resident who organically grew into SL business?

Now i know for many people, it would still be easy to make the distinction. But place yourself into LL's shoes. They would need to hire the staff, and then they have to follow my little trail here and now decide in all honesty, Dominus by Francis Chung and Donkervoort by Frans Charming, who is what?

The problem does not lay in the extremes but in these grey zones. Should and would you even want LL, a software development and server hosting company, hire a dozens of people to investigate these cases.

Another example, it wouldn't surprise me that at some point a SL only business starts selling RL products, actually now that i think about it, some already are. Nocturnal ThreadsDoes Nocturnal Threads now get penalized for trying to make a buck in meat space, and has to pay increased tier prices? I would say no.

Now what if a succesfull business selling merchandise on Cafepress comes into SL, and starts selling their design there as well. Would they have to start paying for Commercial tier rates?

I wouldn't want LL to burden themselves with these kind of checks, especially with the ever growing popularity of SL we will see more and more business crossing the virtual and meat space border from both sides. It would become just a impossible as it would be now to investigate every business on the Internet if they have a RL shop as well.

Thursday, November 09, 2006

Untill now all that I have seen was that after Feb 1th, they might raise the monthly price on the existing Islands. But Zee L. has come out on the congierce townhall and said the following:

"Zee Linden: We will not raise the $195 if you continue to own your server throughout 2007 for all private island regions currently owned and bought now. If you transfer that region, after Feb 1st we may decide we need to raise the price upon transfer. Sorry for the confusion on that point. If you keep owning your island, we won’t raise your price. If you transfer it between now and Feb 1st to someone else they will not pay more throughout 2007. If you transfer it after Feb 1st, we may decide and will announce with enough time for you to react that we need to raise the price for the person the grandfathered region goes to. Keep your server keep your price"

That's good news, and atleast a year of price security.Link to transcript on LL Blog.